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Letter to HHS on Medicare Discount Drug Card Program

April 7, 2004
Mark B. McClellan, M.D., Ph.D.
Centers for Medicare and Medicaid Services
Department of Health and Human Services
200 Independence Avenue, S.W.
Washington, D.C.
Dear Dr. McClellan:
As you may remember, prior to the March 19th listening session of the Reimportation Task Force, I mentioned to you that Consumers Union has some concerns about the Medicare discount drug card program. You asked me to provide you with more detailed information. On April 1, I testified before the Health Subcommittee of the House Ways and Means Committee in a hearing titled “Medicare Drug Discount Card Program.” I have enclosed a copy of my written testimony because it details our key concerns with the drug card proposal. The following issues are highlighted in our testimony:
● Medicare beneficiaries are likely to be confused about how to choose, and whether to choose, a discount drug card;
● Bad actors in the marketplace will create fraudulent schemes that victimize the vulnerable; and
● The CMS categorization of drugs into 209 therapeutic categories may ultimately discourage the use of generics.
We were pleased to see yesterday’s CMS announcement regarding the beginning of additional grants for SHIP programs. These state health insurance counseling programs have the potential to help reduce beneficiary confusion in this increasingly complex marketplace. Beneficiaries are in need of objective, in-depth counseling services, and SHIP’s have a long track record of providing this kind of assistance.
We understand that CMS intends to prepare and disseminate detailed information to Medicare beneficiaries about the program. In order to address some of our concerns and improve the information available to consumers and the public, we urge CMS to bolster consumer understanding by creating a simple comparison measure (to supplement the more detailed materials); to aggressively guide beneficiaries toward generics whenever possible, and to establish an analytically sound basis for measuring the impact of the program. Specifically, we urge CMS to:
● Require all participating discount drug cards to list the prices for generic alternatives for all drugs for which a generic is available.
● Develop a baseline (e.g., the federal supply schedule) for comparing the discounts available (at different points in time) by the various cards to minimize the manipulation of “discount” estimates through jacking up of the price just before the program begins.
● Develop a simple one-figure index that enables the consumer to compare savings on average of various discount drug cards. For example, Plan A might offer drugs that cost 150%, on average, of the federal supply schedule price, while Plan B might offer drugs that cost 200%, on average, of the federal supply schedule price.
● Study the true discounts that result, measuring the net impact compared to discounts already available, while carefully selecting appropriate base prices that do not inflate the measure of the discount.
Our testimony provides some additional detail. I would be happy to discuss these issues with you or your staff. Thank you for considering our views.
Gail E. Shearer
Director, Health Policy Analysis
Washington Office
Attachment: Consumers Union Testimony of April 1, 2004